Steel Dynamics Forecasts Stronger Profitability in Q2 2025

Steel Dynamics Expects Stronger Profitability in Q2 2025

Steel Dynamics Inc. (SDI), a leading electric arc furnace steelmaker based in Fort Wayne, Indiana, forecasts a significant rise in profitability for the second quarter of 2025. The company expects earnings between $2.00 and $2.04 per diluted share, reflecting a 39% increase from Q1 2025, which saw earnings of $1.44 per share. However, SDI’s projected earnings are lower than the $2.72 per share reported in Q2 2024, marking a 36% year-over-year decline.

Despite this decrease, SDI remains optimistic. The company attributes the increase in profitability to a notable expansion in metal spreads. Higher steel pricing helped offset rising scrap costs. Long-product steel shipments grew sequentially, while flat-rolled volumes slightly declined due to the inventory overhang from coated flat-rolled steel imports. Demand remains strong across key sectors, including energy, nonresidential construction, automotive, and industrial.

Key Insights on SDI’s Steel Operations and Market Performance

SDI expects its steel segment to show significantly stronger profitability in Q2 2025 compared to Q1. The expansion in metal spreads plays a critical role in this increase. Higher steel pricing directly fuels this growth. Although flat-rolled steel volumes contracted slightly, long-product shipments improved. This shift signals robust demand in the construction and manufacturing sectors. It also highlights strong demand from SDI’s nonresidential construction and automotive sectors.

However, SDI expects steel segment pretax earnings to be impacted by a noncash write-off of consumable assets. This write-off is expected to reduce earnings by $32 million. While it highlights some challenges in the steel sector, it does not drastically affect SDI’s overall profitability outlook. On a positive note, SDI anticipates steady performance from its metals recycling operations under OmniSource Corp. Stronger shipments should offset the lower pricing in this sector.

SDI’s Aluminum and Steel Fabrication Updates

SDI continues to make significant progress in aluminum production. The company is commissioning its Aluminum Dynamics flat-rolled mill in Columbus, Mississippi, and its recycled slab center in San Luis Potosi, Mexico. These new facilities should positively impact SDI’s aluminum business, with shipments expected to begin mid-2025.

In steel fabrication, SDI expects a decline in earnings compared to Q1 2025. Metal spread compression and a modest drop in average realized sales prices are the primary causes. However, SDI remains optimistic about future demand. Increased manufacturing orders, a growing order backlog, and ongoing investments in domestic manufacturing support this outlook. The U.S. infrastructure program and onshoring trends should drive future demand for SDI’s steel products.

SuperMetalPrice Commentary:

Steel Dynamics’ second-quarter 2025 earnings forecast highlights the strength of its steel operations. The company has proven its ability to adapt to market changes, particularly with rising steel prices and improved long-product shipments. SDI’s investments in aluminum and recycling operations show its forward-thinking strategy to diversify revenue streams. With global demand for steel and aluminum growing, SDI is well-positioned to capitalize on opportunities in infrastructure and domestic manufacturing.